A study by MasterCard has identified the FinTech sector as the most vibrant sector, owing to the increase in funding for the sector.
The white paper which was titled ‘The Future of Fintech: Rapid Growth Attracts Smart Capital’ examined the FinTech ecosystem in Kenya, Nigeria, and South Africa.
According to the study, “the fintech sector accounted for 27% of the record-high number of deals closed and 61% of the US$2.7 billion deployed across Africa in 2021. The space was further characterized by mega deals of more than US$100 million each.
“The growth in the number of fintech companies in Africa is reflective of global fintech funding which jumped to a new record of US$131.5 billion in 2021. The number of fintech unicorns reached 235 with 34 alone born in Q4-2021. Fintech companies now represent more than 20% of total tech unicorn value, compared to 15% in the previous year.”
The study, which identified South Africa and Nigeria as the countries leading in the transition to digital payments also observed that FinTech firms in Africa have focused on accelerating financial and digital inclusion in the region.
“South Africa, Nigeria, and Kenya were also seen as among the countries leading the transition to digital payments, with infrastructure and policy frameworks that enable this growth firmly in place.
“It is encouraging to witness the growth of the fintech landscape across the region, creating multiple opportunities for start-ups, scale-ups, enablers, and micro, small and medium enterprises (MSMEs) to bring more people into the digital fold.” the study said.
Part of the observations made in the study included collaboration between governments, regulators, financial institutions, payment and technology companies, funders, as well as entrepreneurs leading to the development of use cases as increasing financial inclusion.
“Recent years have seen a faster rate of digitization, driving the adoption of neobanks and digital payments. Cryptocurrency, nonfungible tokens (NFTs), and blockchain-backed technologies have come into the mainstream, often backed by dynamic regulation that supports the growth of more affordable financial services.
The Senior Vice President, of Digital Partners and Enablers, Eastern Europe, Middle East, and Africa, Mastercard, Ngozi Megwa, while commenting on the study said “At Mastercard, we are helping to fuel fintech acceleration by offering access to our expertise, network, and technology. We provide a portfolio of technology solutions, APIs, developer tools, partner networks, startup programs, and a community experience for every fintech company and payments developer, helping turn their bold ideas into reality,” she said.